Business Context and Reporting Period
This Form 8-K filing by Rexford Industrial Realty, Inc. (REXR) reports the completion of an asset disposition on November 22, 2016. The filing includes unaudited pro forma financial information as of September 30, 2016, and for the nine months ended September 30, 2016, and the year ended December 31, 2015, to reflect the impact of the transaction.
Key Financial Metrics
Transaction Details
- Asset Sold: 115,760 rentable square foot industrial property at 22343-22349 La Palma Avenue, Yorba Linda, California.
- Contract Price: $17.0 million.
- Net Proceeds: $16.251 million (after closing credits and transaction costs of $0.749 million).
- Net Book Value: $11.469 million.
- Gain on Sale: $4.782 million.
Pro Forma Financial Position (as of September 30, 2016)
- Total Assets: $1,508.8 million (increased by $4.6 million due to cash proceeds).
- Cash and Cash Equivalents: $71.5 million.
- Total Liabilities: $558.3 million.
- Total Stockholders' Equity: $927.9 million.
- Notes Payable: $500.4 million (no change from historical).
Pro Forma Operating Results
- Nine Months Ended Sept 30, 2016:
- Total Revenues: $90.4 million.
- Net Income Attributable to Common Stockholders: $15.6 million.
- Diluted EPS: $0.25.
- Year Ended Dec 31, 2015:
- Total Revenues: $92.8 million.
- Net Income Attributable to Common Stockholders: $1.5 million.
- Diluted EPS: $0.03.
Material Changes Versus Prior Period
The pro forma adjustments reflect the removal of the sold property's historical results. For the nine months ended September 30, 2016, the disposition reduced total revenues by $0.982 million and total operating expenses by $0.665 million. The transaction resulted in a net reduction to pro forma net income attributable to common stockholders of $0.307 million for the nine-month period, primarily due to the removal of the property's operating income which was less than the gain recognized in the historical period (the gain is recognized in the historical period, while the pro forma assumes the sale occurred at the beginning of the period, removing the operating income stream).
For the year ended December 31, 2015, the pro forma adjustments reduced total revenues by $1.137 million and total expenses by $0.928 million, resulting in a net income reduction of $0.201 million attributable to common stockholders.
Guidance, Outlook, and Risks
The filing does not provide forward-looking guidance, management commentary on future strategy, or specific risk factors beyond the standard disclaimer that pro forma information is not necessarily indicative of future results. The transaction was completed with an unaffiliated third party.
Investor Verification Checklist
- Verify the exact closing date and final net proceeds received from the sale of the Yorba Linda property.
- Review the historical Form 10-Q (filed Nov 7, 2016) to compare actual Q3 2016 results against the pro forma adjustments.
- Confirm the allocation of the $4.782 million gain on sale in the historical financial statements versus the pro forma presentation.
- Assess the impact of the reduced asset base on future rental revenue and occupancy rates.
- Check for any remaining debt covenants or liquidity requirements affected by the change in total assets and cash position.